You can have anything you want, just not everything you want. That’s the mantra our staff hear me say every year as we begin the process of budget construction. It’s a true statement, and yet loaded with tensions.

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Most pastors are not thrilled with the idea of building a budget each year. But serving in a church that has a budget with no connection to reality, or no real budget at all is a grenade waiting to explode.

How to start

I urge you to start with the idea that you have enough. I know that might seem like “pie in the sky” if your actual income is lower than your projected expenses. This always causes stress and pressure. But, I’ll say it again, it’s essential to view what you have as enough, because that is what you have! You may be required to make major adjustments, but we all do in different seasons. When you believe “I don’t have enough,” you begin to shortchange your vision and what God can do. I will admit, things can get tough, but you have enough. Let’s start there.

How you view the above thought and how you lead in organizational finances reflects your personal theology.  The resources of your church are entrusted to you, in order to maximize kingdom return.  You are a steward of God’s money. You have a responsibility to maximize the return. This parable is one of many passages that give depth to this truth. (You know the story, so I’ll pick it up in the middle.)

19 “After a long time the master of those servants returned and settled accounts with them. 20 The man who had received five bags of gold brought the other five. ‘Master,’ he said, ‘you entrusted me with five bags of gold. See, I have gained five more.’ 21 “His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’ 28 “‘So take the bag of gold from him and give it to the one who has ten bags. 29 For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. 30 And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.”   Matthew 25:14-30 (full context of story)

God has investment alternatives and how we deliver compared to those alternatives matter.  Within your church leadership, you have options on where and how to invest Kingdom resources. It’s personal because we all invest differently. We invest different amounts, in different things, with differing amounts of risk. That’s natural, but God wants to see results.

Let’s get practical. How do you build and operate a church budget?

  1. Identify what you have, not what you need. This is not a lack of faith, it’s how you build a budget. If your vision exceeds your resources, then take that to God and cast vision! But don’t pretend you have more than you actually do.
  2. Allocate what you have according to pre-determined guidelines that are established based on principles and priorities. Invest your monies according to vision and the desire to move the growth and health of the church forward. Don’t fund certain things because of politics or strong personalities or “you always have in the past.”
  3. Monitor your progress and performance. It’s important to keep up with your spend rate. The only thing worse than running out of money is to be unaware that you’ve run out of money! Stay current and accurate. Spend wisely. Be generous when it comes to people, and frugal when it comes to things.
  4. Adjust to changing circumstances based on principles and priorities. This is the tough part. In extreme cases you may need to let staff go. That’s always rough. But in most cases, it’s more about deciding where you can cut back until you are in a better cash position.

The basic church budget setting formula:

Projected attendance* (growth) x average giving per-capita x 52 = Forecasted Income.  It’s that simple.  The near infinite number of variables from the economy to the morale and momentum in your church make that formula complicated. Nonetheless, that’s the formula. *Based on adult worship attendance only.

For example:

Let’s say your projected average worship attendance is 350, (not your total attendance, just the worship count) and your adult worship giving per-capita is $29, and you will hold services all 52 weeks of the year. Then your numbers look like this.

350 x $29 = $10,150 x 52 = $527,800.

$527,800 = That’s what you have to work with!

From there you decide on the percentage you will allocate to each key area.

For example:

  • 45% to personnel
  • 10% to missions
  • 15% to local church ministry
  • 13% to debt
  • 12% to operations
  • 5% to margin (for opportunities and the unexpected)

There is no right or wrong approach to the percentages you choose, but there is wisdom that comes from experience.

I recommend that:

  1. You never exceed 50% for total personnel costs. (The closer you get to 40% the better.)
  2. Always give at least 10% away (missions, compassion, justice etc.)
  3. Never exceed 15% to debt (building mortgage, land, expansion etc.)
  4. If your percentages are low, for example, in the debt category, because your building is paid for, increase your margin.
  5. Always have a line for margin, even if it’s 1%.

Church budgeting can be stressful, but with preparation, discipline, and prayer it can be very productive. It’s a lot about numbers, but it’s more about how you think, your theology, your discipline and wisdom. So pour a tall cup of your favorite coffee, roll up your sleeves and go to work. It’s worth it!